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Mainland  jet-fuel prices will be  lowered by 330 yuan (HK$374) a tonne  this quarter, a move expected to help airlines  ride out the economic slowdown.
China National Aviation Fuel Holding, the sole wholesaler of jet fuel, had trimmed the purchase price index of  jet fuel by 6.5 per cent amid  falling  international prices,  a China Eastern Airlines Corp official was quoted by China Business News as saying yesterday.
The well-flagged price cut  came after the ex-factory price of jet fuel  was slashed by 2,400 yuan per tonne to 5,050 yuan last month.
'The cut could save us almost 1 billion yuan in fuel expenditure this year,' China Southern Airlines company secretary Xie Bin said yesterday.
Mr Xie said the airline's fuel consumption  would be about 3 million tonnes this year.  Its fuel bill  topped 18.32 billion yuan in 2007.
The domestic jet-fuel price has  three components: the ex-factory price  set by the National Development and Reform Commission, the purchase price index controlled by China National Aviation Fuel, and  price premiums at  airports.
But the price cut failed to  support  mainland airline  stocks yesterday.  China Eastern fell 1.96 per cent to HK$1, Air China  slipped 1.59 per cent to HK$1.86 and  China Southern closed 1.6 per cent lower at HK$1.23.
Jet fuel accounts for more than 40 per cent of the operating costs of mainland airlines and is the largest component  of airline costs.
While the airlines  can  gain from falling oil prices, losses from fuel hedging contracts  offset those benefits as  they have locked in part of the fuel they consume  at higher prices.
Air China and China Eastern are both suffering from  unrealised fuel hedging losses incurred last year  because of the  abrupt drop in oil prices.
Air China reported 6.8 billion yuan of paper losses  from fuel hedging, while China Eastern booked 6.2 billion yuan of losses in the fair value of hedging contracts last year.
China Southern said it had no  hedging contracts outstanding.



Jet-fuel price to be cut by 330 yuan